In the realm of science and innovation, the UK proudly boasts a prestigious hub in the Golden Triangle of Biopharma. This dynamic region, spanning across London, Oxford, and Cambridge, is renowned for its ground-breaking research, cutting-edge technologies, and world-class expertise in the pharmaceutical, biotechnology, and MedTech sectors.
However, 2023 saw some extraordinarily challenging times for the UK life sciences industry, and as the Golden Triangle makes up a significant contribution, our current report will outline the impact and hopefully the green shoots of recovery. The UK is at the forefront of life sciences in Europe, with four of the top ten global research universities, 6,850 businesses, and circa 304,200 jobs. The UK government has set science high on the national agenda, aiming to ensure the UK is a globally recognised hub. The UK is also a global leader in VC funding per capita, and within the golden triangle, Cambridge leads the ranking.
Science Space
A key indicator of the direction of travel of the Biopharma industry is very much the supply and demand of science space. This includes labs (wet & dry), offices, and manufacturing & prototyping facilities. Leasing volumes in Cambridge had been restrained by a shortage of supply, at the end of December 2023, there was only just over 2% of lab space available in Cambridge, but with new stock completing in Oxford and London, some of the acute shortages have eased. Currently, there is 3.1 million sq. ft of life sciences space under construction across the Golden Triangle with 26% of supply under construction already pre-let or under offer, demonstrating that occupier demand remains robust after a period of turbulence. Notably, laboratory take-up in Oxford and Cambridge is set to be the highest annual total ever recorded in 2023, demonstrating the continued growth of these sectors. There is an enormous opportunity from increasing the supply of life sciences real estate. Particularly promising was a spike of investment in Q4 2023. Venture capital (VC) funding in the UK in 2023 was down 8% on the five-year average, but is expected to increase in 2024, Golden Triangle VC funding volumes totalled £2.14 billion in 2023 and, in particular, Early Stage VC raises, although fewer in volume, were larger.
If we measured 2023 by vacancy numbers, we see the impact following an incredibly robust 2022. In Cambridge, total vacancies fell by 62%, in London by 35%, and in Oxford by 51% compared to 2022. Vacancies were down significantly in 2023 across all areas. Within pharmaceutical companies, volumes fell 49.4%. Currently, pharma makes up 57% of all vacancies across the region.
However, with the data available on real estate showing a positive uptick and funding, there are signs that the market is shifting. Given how much funding is sourced from the USA, it is worth looking at the S&P XBI Biotech ETF as a market indicator currently showing an uplift of 21% over the last 12 months, and over 50% of this in the last three months of 2023, meaning that capital is being invested in the sector once more. While the US is not the same as the UK, this will be a positive sign for the UK as we tend to follow the US patterns within life sciences.
Growth
There should be no limit to the ambitions of the UK life sciences sector. It has renowned academic strength, a highly skilled workforce, high levels of R&D spend, cutting-edge clusters of activity, and a unique health data partner in the NHS. However, on current trajectories, the UK could miss out. For example, construction is underway that would increase the supply of laboratory space by 5.2% a year in Oxford and Cambridge; compared to 8.9% a year in Boston. If the life sciences real estate markets of Cambridge, Oxford, and London were to match their counterpart markets in the US, by 2035 it would mean:
More jobs. 67,000 more in high-skilled, high wage employment.
More economic output. £4bn a year in additional GVA.
More tax revenue. £1.1bn a year extra in funding for public services.
The Golden Triangle of Pharmaceuticals and Biotech in the UK represents a powerhouse of innovation, research, and development in the life sciences sector. Through a combination of innovative technologies, top-tier talent, and collaborative partnerships, this dynamic region continues to push the boundaries of scientific discovery and shape the future of healthcare and medicine on a global scale.
Yvette Cleland - CEO | Cpl Life Sciences
